Home Economy RBI banned Mastercard from adding new customers

RBI banned Mastercard from adding new customers

The RBI banned Mastercard indefinitely from issuing new debit, credit or prepaid cards to customers in the South Asian market over noncompliance with local data storage rules.

Due to violation with local data storage requirements, the RBI banned Mastercard from issuing new debit, credit, or prepaid cards to customers in the South Asian market indefinitely.

RBI banned Mastercard from adding new customers

The new limits will take effect on July 22, according to the Reserve Bank of India (RBI). In an escalation of a long-running conflict over local data storage laws, India’s central bank blocked global payments firm Mastercard from adding new clients beginning next week.

“Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be noncompliant with the directions on Storage of Payment System Data,” RBI said in a statement on Wednesday.

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Image: Utkal Today

RBI banned Mastercard, can no longer issue debit, credit or prepaid cards

From July 22, Mastercard will no longer be able to issue debit, credit, or prepaid cards to clients in India. Mastercard did not immediately respond to queries from AFP. According to London-based payments firm PPRO, Mastercard accounted for 33% of all card payments in India last year.

According to the RBI, the new regulation will have no effect on existing Mastercard users, who are among India’s top three card issuers. “Mastercard shall advise all card-issuing banks and non-banks to conform to these directions,” it said.

Also Read: Importance of understanding performance statistics of Prompt Corrective Action under RBI

India’s Central Bank’s penalising regulations

This isn’t the first time India’s central bank has penalised a company for failing to comply with local data-storage regulations, which were announced in 2018 and required compliance within six months. Payments companies must store all Indian transaction data on servers in India, according to the guidelines.

The RBI barred American Express and Diners Club from accepting new customers in April, citing a violation of the same guidelines.

Visa, Mastercard, and a number of other companies, as well as the US government, have already asked New Delhi to reconsider its guidelines, which they claim are intended to give the regulator “unfettered supervisory access.”

Visa, Mastercard, and American Express had also advocated for the rules to be changed significantly or repealed entirely.

UPI transactions surge

Global payment card firms are facing rising competition from India’s United Payments Interface (UPI) transactions, which use phone numbers and QR codes to enable card-less and cashless payment options.

In June, there were a total of 2.8 billion UPI transactions totaling 5.5 trillion rupees ($73.8 billion).

Written by: Sugyani Mohapatra


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